Swedish Krona Rises to Two-Month High Versus Dollar on Rate Bets

By Neal Armstrong -
Jun 19, 2013

The Swedish krona rose to a two-month high against the dollar after government reports showed
consumer confidence improved and unemployment declined, damping
speculation the central bank will cut interest rates further.

Sweden’s currency strengthened versus all 16 of its major
counterparts after a government research institute said the
Riksbank will keep its benchmark interest rate at 1 percent this
year as the economy improves. Investors should bet the krona
will appreciate to the highest since April against the euro,
according to Nordea Bank AB.

“These are very impressive numbers that are reducing the
probability that the Riksbank will cut interest rates,” said
Jonas Thulin, head of global alpha strategy at Nordea Bank in
Stockholm. “The krona has strengthened today and we think that
will continue.”

The krona advanced 0.6 percent to 6.3964 per dollar at
3:17 p.m. London time after appreciating to 6.3883, the
strongest level since April 17. Sweden’s currency gained 0.7
percent to 8.5673 per euro after rising to 8.5543, the most
since June 4.

Nordea earlier this month advised investors buy the krona
versus the dollar and is about to publish a recommendation the
currency will strengthen to 8.31 per euro, Thulin said.

A Swedish consumer confidence index, according to a new
calculation, improved to 98.2 this month from 97.7 in May, the
National Institute of Economic Research said. A gauge of
manufacturing confidence climbed to 94.3 from 90.3. The
unemployment rate fell to 8.2 percent in May from 8.7 percent
the previous month, Statistics Sweden said.

Growth Rebounds

The central bank won’t cut its main lending rate again this
year as growth in the largest Nordic economy rebounds this year
and next year, the Swedish National Institute of Economic
Research said. The central bank has lowered its benchmark four
times since December 2011.

The Riksbank will keep its benchmark rate at 1 percent in
2013, the institute forecast in a statement on its website. The
economy will grow 1.5 percent this year and 2.5 percent in 2014,
it predicted, raising estimates from March.

Sweden’s currency appreciated 0.5 percent to 1.1174 per
Norwegian krone after advancing to 1.1156, the strongest level
since May 8.

The krona has gained 9.1 percent in the past 12 months, the
best performer among 10 developed-nation currencies tracked by
Bloomberg Correlation-Weighted Indexes. The euro gained 5.4
percent and the dollar dropped 0.8 percent.